Originally posted by 07Slavesam:
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Construction is terribly competitive and notorious for it's low profit margins (there have been numerous objective reports on this and it's partially the reason why the various State Security of Payment Acts are all being revised and enacted in 2022). I've been working within both the construction and mining industry for ~20 years. It's completely normal practice for contractors to bid jobs with 3% profit margins and put stretch targets in place to try and achieve 7%. Most of these projects run for several years and the largest, like multi-billion dollar resource jobs and large infrastructure projects make money by cash flow management i.e. 1) large cash injection on mobilisation from the client to positively leverage the company 2) squeeze the supply chain to almost breaking point 3) pay the supply chain slowly so we can invest the positive cashflow into something more lucrative than construction. Our largest construction companies in Australia operate more like investment fund managers than builders most of the time.
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lol... .are you seriously comparing construction industry low profit with state security act? State security act meaning as per google is :What does the Security of Payment Act do? The Building and Construction Industry Security of Payment Act 2002 (known as the SOP Act) helps ensure that any person who carries out construction work or supplies related goods and services under a construction contract gets paid.
So the act is about making payment on time and has nothing to do with low margin practice. I won't respond further to anything else on your comment as nothing makes any sense as you fail to understand meaning and importance of diversified income stream for any business.
